How Your Birth Order Affects Your Spending Habits

Whether or not birth order affects the makeup of personality and behavioral traits is an extensively-researched topic with convincing arguments on both sides. Regardless of which side you come down on, you can probably identify with at least a few of the stereotypes associated with your birth order.

While most studies have focused on the role that birth order plays in personality, recent research conducted by the Journal of Financial Therapy suggests that your birth order can also affect financial decision making. Here’s what your birth order says about your finances.

The Oldest Child

The oldest child in the family tends to be mature, confident and, more often than not, a perfectionist. As a result of the responsibilities and expectations placed on them by parents at an early age, older siblings are well organized and generally in control of their lives.

According to clinical psychologist Dr. Mark Harrold in his Irish Times article, firstborn children enjoy more attention from doting parents. Not only do these individuals connect more with their parents, but they also generally earn better grades and pursue more conservative, lucrative careers such as in law, accounting, banking and information technology. The personality traits associated with firstborn kids might also translate into good spending habits, as these children tend to be diligent about managing money and more financially stable overall.

“I certainly see different ways in which birth order seems to affect behavior with money,” said Jerry Linebaugh, II, founder and CEO of JLine Financial. Linebaugh went on to add, “Firstborns handle money differently. I see a pattern in a lot of people that I know. They are viciously protective of making sure bills are paid on time and living within their means, which includes building savings and investments.”

How to Overcome Your Natural Inclination

The innate desire to come first in everything apparently doesn’t end at birth, as many older siblings are achievement oriented and thrive in leadership positions. As the firstborn child of your family, you might find that there are a number of financial priorities pulling you in different directions. For example, you might be chasing 20 percent annual returns in your retirement account while simultaneously building a six-month emergency fund and contributing toward college savings accounts for your kids.

Unfortunately, this internal drive for perfection can cause you to set unrealistic goals that can sabotage even the best-laid financial plans. If this sounds like you, remember that pursuing too many financial priorities at once can lead to unnecessary levels of stress. Play to your strength in organization and make a list prioritizing both your long- and short-term goals. Use this list as a roadmap and take small steps each month toward achieving objectives.

The Middle Child

While the oldest child is often given the lion’s share of attention from parents, and the youngest can typically do no wrong, the middle child might feel lost in the shuffle. Experts refer to this condition as “middle child syndrome.”

According to marriage and family therapist Lisa Bahar, “Middle children may fly under the radar screen at times and are more flexible, more apt to be open, take the centered approach, and sometimes (are) more balanced with money.”

Middle children are resigned to the fact that someone is always both ahead of and behind them in terms of familial structure. As a result, they are often found to be naturally gifted problem solvers with excellent negotiation skills. And when it comes to financial habits, the middle child is a born saver, with nearly 65 percent of the group contributing money to their savings accounts each month, according to Business News Daily.

How to Overcome Your Natural Inclination

While middle children are hard wired to be understanding, cooperative and flexible, they also have a tendency to take that flexibility too far and become devoted to pleasing others. Since they’re so adept at resolving disagreements between siblings, middle-born kids often grow up believing that they can handle anything thrown their way. In many cases, this tendency results in middle children giving money to others in order to save them from financial ruin. On her website, late psychologist and author Harriet Braiker referred to people pleasing as a disease. She went on to explain that, when people pleasing is done in excess, it can become an addiction that leads one to neglect his or her own wants and needs.

Fortunately, there are ways for middle children to avoid feeling burdened by the weight of pleasing others. A great way to get started is to practice your ABCs, as outlined below by Houston-based financial consultant Kurtis Klausmeyer.

Assess the situation: Before moving forward you must get a handle on the problem. Make note of the last few times you exhibited people-pleasing behavior and think about the reasons why.

Break the cycle: The next time you’re asked for a favor that you don’t want to provide, practice saying no. See what happens. You’re likely to find that the people who are really your friends won’t mind being turned down on occasion.

Cut them off: By assessing the situation and breaking the cycle, you will likely identify several relationships in your life that are one sided. Save yourself from the long-term drain of people who take advantage of your generosity while providing nothing in return.

The Youngest Child

The last-born child, affectionately known as the baby of the family, is generally more outgoing than his or her siblings. More often than not, this person is also the life of the party.

While the youngest children might seem charming and fun to be around, they also tend to demonstrate bad spending habits and are typically the least financially responsible of their siblings. It doesn’t help that parents have often become more lenient about discipline by the time the second or third child is born. According to a recent Yahoo Health article, parents have a habit of overindulging and spoiling the youngest children in families. Ultimately, this desire to protect the baby of the family can backfire, causing the individual to spend rather than save for a rainy day.

How to Overcome Your Natural Inclination

Because younger siblings are accustomed to being taken care of, they are less likely to curb spending in the face of bleak financial outlooks. From birth, the youngest child prefers instant gratification over the satisfaction of longer-term goals.

According to Klausmeyer, in most cases these carefree days of spending will eventually subside in favor of more prudent financial management. However, he warns that many individuals don’t truly change until they face financial crises. His simple but effective approach to dealing with these types of character traits is based on three key principles:

The Only Child

The only child occupies an interesting position because he or she tends to share both positive and negative character traits from all of the other birth positions. Only children are more likely to grow up around adults and, as a result, are more mature and ambitious. Having spent so much time as the focus of their parents’ attention, only children are often also highly creative and confident.

Despite these positives, many only children possess unhealthy habits with regard to spending. Said family therapist Lisa Bahar, “Only children appear to meet the myth more often than not, that the spending patterns are more about being the only one, difficulty with sharing and [being] territorial of what is theirs.”

How to Overcome Your Natural Inclination

Because only children have enjoyed the uncontested attention of their parents throughout their lives, their spending tendencies lean toward trying to impress others at all costs, even if it means living beyond their means.

If you are an only child and recognize this free-spending character trait within yourself, take solace in the fact that, like the firstborn sibling, you are also a perfectionist and tend to be good at planning. Tap into that talent by perfecting your budgeting skills. Find expenses that you can cut and start practicing positive spending habits. Before you know it, you’ll be back in the driver’s seat and heading toward a more successful financial future.

Ultimately, no matter where you fall in your family’s birth order, you can take control of spending and enjoy a more positive relationship with money. Start by playing up your strengths and practice overcoming your natural inclinations. Doing so will help you achieve financial success, regardless of where in the line you were born.

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